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HSBC and Santander to refund millions for overdraft text failures

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A man walks past a logo of HSBC. Photo: Lim Huey Teng/Reuters

HSBC (HSBA.L) and Santander (SAN.MC) are set to hand millions of pound back to over 100,000 customers, after the two banks breached rules about unplanned overdraft alerts.

The Competition and Markets Authority (CMA) said Friday it stepped in to force refunds after the two banks failed to text customers warning them they were about to go into unplanned overdrafts. The CMA introduced new rules in 2018 that mandated the text alerts.

“The refunds paid by the banks cover all fees incurred by customers from going into unarranged overdrafts where they had not been warned beforehand by the required text alerts,” the CMA said in a statement.

HSBC broke the overdraft text rules twice. An anti-social hours policy meant the lender decided not to text customers after 10.45pm but that left some customers unaware they were straying into unplanned overdrafts.

A change of computer systems also led to formatting errors that meant some HSBC customers failed to receive texts that were sent.

The CMA said 115,000 HSBC customers were affected and the bank would return £8m to them. HSBC has begun contacting affected customers and the process is expected to take weeks.

“We apologise to those customers who for different reasons did not receive an alert,” a spokesperson for HSBC said. “We will continue contacting customers who incurred overdraft charges as a result of these issues to apologise and provide a refund.”

Santander breached the overdraft text rules six times after their introduction, the CMA said. Santander has not yet disclosed how many customers were affected or the total amount it is set to refund them.

“We are very sorry that some customers in certain circumstances were not sent the required overdraft alerts,” a spokesperson for Santander said. “The introduction of these alerts is a move we welcomed and believe is a real support to customers. 

“We have carried out a detailed review to understand why the errors happened and have taken steps to fix the issues. We are now working to identify and refund all affected customers as quickly as possible.”